During his firm’s presentation at NAREIT’s REIT Week in New York last week, Kenneth Bernstein, president and CEO of White Plains, N.Y.-based shopping center REIT Acadia Realty Trust, offered a candid assessment of the market for distressed assets and how the firm has regrouped after the wave of troubled properties failed to materialize.

One of Acadia’s avenues of growth in its time as a REIT has been a series of opportunity funds, through which it has pursued value-add acquisitions. As of December 31, 2010, it had launched three opportunity funds, the $90 million Acadia Strategic Opportunity Fund LP (launched in September 2001), the $300 million Acadia Strategic Opportunity Fund II LLC (launched in June 2004) and the $502.5 million Acadia Strategic Opportunity Fund III LLC (launched in May 2007).

The first two funds were fully invested and generated healthy returns for Acadia and other investors. (Acadia typically owns a minority stake in the funds, collects management fees and earns a promote fee, depending on the funds’ profitability.) The third fund is still active. To date it has made nine opportunistic investments and has approximately $200 million of capital available for new investments with an investment period that concludes in May 2012.

“We did not see as many distressed sellers as we thought we would,” Bernstein said during his presentation.

Rather than be able to buy centers from a wave of distressed buyers, Acadia is now seeking opportunities that fit more specific investment criteria. It is largely focusing on either street retail in high-density, high-demand, high-barrier-to-entry locations in addition to seeking well-located shopping centers with weak supermarket anchors.

On the urban retail front, Acadia has completed acquisitions in the New York metropolitan area — including 125 Main Street in Westport, Conn. and the Storage Post portfolio, which includes assets in New York and New Jersey.

In addition, in February in a joint venture with Terranova Corp., it acquired three buildings containing 61,000 square feet of space in the shopping district on Lincoln Road in Miami Beach, Fla., for $51.9 million with Fund II providing 95% of the equity in the deal. The space is currently 65% occupied. Here, Acadia will attempt to lease the vacant space as well as explore potential redevelopment opportunities.

It also has an eye on looking for centers with weak supermarket anchors where there might be an opportunity to upgrade the anchor.

“Another interesting play out there is buying well-located properties that are anchored by troubled supermarkets,” Bernstein said. “The supermarket industry is going through its fair share of challenges. … (But) that doesn’t mean that the locations (occupied by troubled supermarkets) aren’t high quality.”

Fund III has made two investments off that thesis — acquiring White City Shopping Center in Shrewsbury, Mass., and the 65,000-square-foot Superfresh anchor at Orchard Center in Silver Spring, Md.

In the White City deal, Fund III in partnership with Charter Realty & Development Corp. invested $56 million to acquire the center, which is anchored by a Shaw’s. The fund put up 84 percent of the joint venture equity. Here, the plan is to replace Shaw’s with a stronger supermarket anchor.